| Thu 28 Jan 2010, 12:50 | | BAW - Barloworld Limited - Trading update |
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BAW
BAW
BAW - Barloworld Limited - Trading update
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Share code: BAW)
(ISIN: ZAE000026639)
("Barloworld or the Company")
TRADING UPDATE
In line with lower activity levels in the mining and construction sectors,
first quarter trading results for the southern African equipment division are
well down on last year. Construction activity is being affected by the
deferral and in some cases the postponement of projects. However, we do expect
a commodity led recovery in mining in the last quarter of 2010.
Maintaining after sales support for the large active Caterpillar machine
population will remain a focus for the year.
The Spanish economy remains weak with little sign of recovery expected before
the end of 2010. The government continues to defer major projects although
there has been some public expenditure at a local level. As a consequence
activity levels in the first financial quarter are below last year and further
restructuring and cost reduction actions have been taken. These are expected
to bear fruit in the latter part of 2010.
In Siberia, first financial quarter trading was down on last year due mainly
to the slowdown in mining spend and delays on infrastructure projects.
However, there are improving signs following rises in commodity prices.
The automotive business is trading ahead of the prior year in the first
financial quarter. The motor retail operations experienced a significant
improvement in used vehicle profitability, while new car sales are showing
some sign of recovery. Car rental rates remain under pressure, while
utilisation continues to be well managed. The car rental business is expected
to benefit from increased activity levels in the second half of the year, from
the 2010 World Cup. The Australian operations continue to show positive
growth. The fleet services business is performing well.
All of our handling businesses continued to experience difficult trading
conditions in the first financial quarter with activity levels below last
year.
Though restructuring has successfully reduced the cost base, weak new
equipment sales and margin pressure continue to undermine profitability. Order
books in Europe and South Africa are growing slowly and improved sales are
expected later in 2010. Agriculture has faced reduced new equipment sales and
margins but both are expected to improve later this year.
In the southern African logistics business profitability in the first quarter
is holding up. In Europe, margins have been affected and the Middle East and
Asia has seen lower volumes and margin squeezes.
The UK syndicated facility of GBP80 million was renewed last year for a
further 3 years. In South Africa, the short-term commercial paper market
remains liquid with spreads narrowing. The company`s long-term debt and
borrowing facilities remain sufficient to fund forecast future requirements.
2010 is proving to be another challenging year. The global economic
environment appears to have stabilised with the expected uptick in commodities
and trading conditions in most of the Barloworld markets and geographies
anticipated in the latter part of 2010. We will continue to focus on
generating positive cash flows, reducing capital expenditure, cutting expenses
and optimising working capital. Skills retention and skills development remain
a strategic priority.
28 January 2010
Sponsor:
J.P. Morgan Equities Limited
Date: 28/01/2010 12:50:01 Produced by the JSE SENS Department.
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